Jacobsen v. Oliver

• Decision Date: 29 April 2002
• Docket Number: No. Civ.A. 01-1810(ESH).,Civ.A. 01-1810(ESH).
• Citation: 201 F.Supp.2d 93
• Parties: David P. JACOBSEN, et al., Plaintiffs, v. James J. OLIVER, et al., Defendants.
• Court: U.S. District Court — District of Columbia

201 F.Supp.2d 93

David P. JACOBSEN, et al., Plaintiffs, v. James J. OLIVER, et al., Defendants.

No. Civ.A. 01-1810(ESH).

United States District Court, District of Columbia.

April 29, 2002.

COPYRIGHT MATERIAL OMITTED

Paul Lawrence Knight, Washington, DC, for Plaintiffs.

George Alexander Lehner, Charles Henry Carpenter, Pepper, Hamilton L.L.P., Washington, DC, for Defendants.

MEMORANDUM OPINION

HUVELLE, District Judge.

Plaintiff David Jacobsen was kidnapped in 1985 in Beirut, Lebanon and held hostage for 532 days by a terrorist group that had been funded, supported, and controlled by the Iranian government. He, like several other hostages, sued in this Court. After entering a default against Iran, the Honorable Thomas Penfield Jackson entered judgment in the amount of $9 million, all of which Jacobsen recovered after Congress passed legislation in 2000 that permitted hostage victims, who had secured judgments prior to July 20, 2000, to recover compensatory damages in full. Now Jacobsen has sued his former attorneys, James J. Oliver, Carla E. Connor, and Barbara A. Barnes, and their law firm, Murphy Oliver Caiola & Gowen, P.C. (collectively "defendants"), complaining that his lawyers did not sue the Iranian Ministry of Information and Security (hereinafter "MOIS") for punitive damages and that their 35% contingent fee was unreasonable and excessive. In his complaint, he alleges legal malpractice (Count I), breach of fiduciary duty for charging excessive fees (Count II), and breach of an implied covenant of good faith and fair dealing (Count III). David Jacobsen's three adult children, Eric and Paul Jacobsen and Diane Jacobsen Martinez (hereinafter the "Jacobsen Children"), have also brought suit, alleging malpractice (Count IV) and negligent misrepresentation (Count V) arising from defendants' failure to include them in their father's lawsuit.

Defendants have moved to dismiss, arguing that as a matter of law, defendants were not negligent because it was not foreseeable at the time of Jacobsen's suit that punitive damages would be recoverable, or alternatively, as a matter of public policy, damages are not available in a legal malpractice action to compensate plaintiffs for punitive damages that arguably would have been available in the underlying action. Defendants also argue that the claim regarding attorneys' fees is barred by res judicata, or alternatively, it should be dismissed because the fees are reasonable as a matter of law. With respect to the Jacobsen Children, defendants claim that this Court lacks personal jurisdiction, venue is improper, their claims are barred by the statute of limitations, and there was no attorney-client relationship between the Jacobsen Children and defendants.

For the reasons set forth below, the Court will deny the motion to dismiss as to David Jacobsen's claims in Counts I and II, but will grant the motion as to Count III. With respect to the Jacobsen Children's claims, the Court will grant the motion on the grounds that these claims are time-barred, and therefore, Counts IV and V will be dismissed.

FACTUAL BACKGROUND

This lawsuit traces back to events in Iran, when in 1985 the terrorist organization, the Hezbollah, abducted David Jacobsen along with Terry Anderson, Thomas Sutherland and Reverend Lawrence Jenco. The Hezbollah held Jacobsen as a hostage for 532 days until November 2, 1986. In 1992, Jacobsen and another former hostage, Joseph Cicippio, and his wife engaged defendant James Oliver and his law firm to pursue legal remedies for their injuries and losses caused by the Hezbollah's actions. (Defendant's Memorandum in Support of Defendants' Motion to Dismiss at 3 [hereinafter "Def.'s Mem."].) At the time, the availability of legal remedies was problematical, because the Foreign Sovereign Immunities Act, 28 U.S.C. § 1605, (hereinafter "FSIA") granted immunity from lawsuits to foreign states with only limited exceptions. Nonetheless, defendants brought suit in this Court in October 1992 on behalf of Jacobsen, Cicippio, and Cicippio's wife against the Islamic Republic of Iran under the FSIA.¹ Cicippio v. Islamic Republic of Iran, No. 92-cv-2300 (D.D.C.1992) (hereinafter "Cicippio I"). In 1993, Judge Jackson dismissed the suit without prejudice, concluding that defendants had not presented a viable legal claim under the FSIA. Cicippio v. Islamic Republic of Iran, 1993 WL 730748 (D.D.C. 1993), aff'd, 30 F.3d 164 (D.C.Cir.1994), cert. denied, 513 U.S. 1078, 115 S.Ct. 726, 130 L.Ed.2d 631 (1995).

Subsequent to this dismissal, Jacobsen and defendants actively lobbied Congress and the Clinton administration to pass legislation that would allow for lawsuits against foreign states that sponsored terrorism. Ultimately, these efforts were successful. In April 1996, Congress passed the Anti-Terrorism and Effective Death Penalty Act of 1996 (hereinafter "AEDPA"), Pub.L.No. 104-132, codified at 28 U.S.C. § 1605(a)(7), which amended the FSIA to allow for lawsuits against foreign states that sponsor terrorism. Jacobsen then signed a second engagement letter, and in July 1996, defendants refiled their suit against Iran on behalf of Jacobsen, Cicippio and his wife, and former hostage Frank Reed and his wife (hereinafter "Cicippio II"). The complaint sought compensatory damages of $100 million plus punitive damages against Iran only, but did not name any "agents or instrumentalities" of Iran.

Subsequent to the filing of Cicippio II, in September 1996, Congress enacted the "Flatow Amendment," which offered new causes of actions to victims of terrorism. See Civil Liability for Acts of State Sponsored Terrorism Act, Pub.L.No. 104-208 § 589, codified at 28 U.S.C. § 1605 note. The Amendment provided in relevant part:

(a) An official, employee, or agent of a foreign state designated as a state sponsor of terrorism designated under section 6(j) of the Export Administration Act of 1979 [section 2405(j) of the Appendix to Title 50, War and National Defense] while acting within the scope of his or her office, employment, or agency shall be liable to a United States national or the national's legal representative for personal injury or death caused by acts of that official, employee, or agent for which the courts of the United States may maintain jurisdiction under section 1605(a)(7) of title 28, United States Code [subsec. (a)(7) of this section] for money damages which may include economic damages, solatium, pain, and suffering, and punitive damages if the acts were among those described in section 1605(a)(7) [subsec. (a)(7) of this section].

The Flatow Amendment expressly provided victims of terrorism with a statutory basis for pursuing legal actions directly against agents and instrumentalities of Iran. In addition, the Flatow Amendment provided a statutory basis for recovery of "solatium" damages (i.e., compensation for "hurt feelings or grief," including mental anguish, bereavement, and grief. BLACK'S LAW DICTIONARY 1397 (7th ed.1999)). Subsequent to passage of the Flatow Amendment, courts have allowed spouses and relatives in direct lineal relationship to victims of terror to pursue legal actions to recover solatium damages. See, e.g., Flatow v. Islamic Republic of Iran, 999 F.Supp. 1, 29-33 (D.D.C.1998); Jenco v. Islamic Republic of Iran, 154 F.Supp.2d 27 (D.D.C.2001); Sutherland v. Islamic Republic of Iran, 151 F.Supp.2d 27 (D.D.C.2001); Anderson v. Islamic Republic of Iran, 90 F.Supp.2d 107 (D.D.C.2000).

In Cicippio II, Iran did not appear to contest the claims, and in November 1997, Judge Jackson entered a default and agreed to schedule individual trials for each of the Cicippio II plaintiffs. Prior to Jacobsen's trial, the Honorable Royce C. Lamberth issued his ruling in Flatow v. Islamic Republic of Iran, in which he held that the Flatow Amendment allowed for punitive damages to be collected directly from a foreign state and awarded solatium damages to family members of Alisa M. Flatow. Disagreeing with Flatow, Judge Jackson ruled that the FSIA precluded an award of punitive damages against a foreign state, but he offered the Cicippio plaintiffs an opportunity to delay the trial so as to amend their complaint to name agents or instrumentalities. The Cicippio plaintiffs declined to amend their complaint, but instead, they withdrew their claim for punitive damages against Iran. (Def.'s Mem. at 7-8.) On August 27, 1998 the Court awarded Jacobsen compensatory damages in the amount of $9,000,000 against Iran.

After trial, efforts were directed at trying to collect on the judgments. On October 28, 2000, the Victims of Trafficking and Violence Protection Act of 2000 became law. See Pub.L.No. 106-386, 114 Stat. 1541 (2000). It established procedures for collecting on judgments against terrorist states by allowing a victim of terrorism, who held, as of July 20, 2000, a final judgment against a terrorist state to receive compensation directly from the United States government. Section 2002(a)(1)(A) of the Act permitted a victim of terrorism to collect "110 percent of compensatory damages" provided he or she "relinquish all rights and claims to punitive damages," and section 2002(a)(1)(B) allowed compensation of "100 percent of compensatory damages," but permitted a victim to continue to pursue the recovery of punitive damages that had been awarded. See Flatow v. Islamic Republic of Iran, 201 F.R.D. 5, 10-11 (D.D.C.2001).

It is against this backdrop that Jacobsen and his children bring this action. In their complaint, David Jacobsen complains that defendants were negligent in failing to sue agents or instrumentalities of Iran for punitive damages, and the Jacobsen Children claim that defendants negligently advised them, via their father, that they had no legal basis to be joined as plaintiffs in the Cicippio litigation.

LEGAL ANALYSIS

I. DAVID JACOBSEN'S CLAIMS

This Court first considers defendants' motion to dismiss the counts brought on behalf of Jacobsen — Count I...